TravelSky Technology Limited (HKG:696) Analysts Are Reducing Their Forecasts For This Year

The analysts covering TravelSky Technology Limited (HKG:696) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the current consensus from TravelSky Technology's nine analysts is for revenues of CN¥6.5b in 2022 which - if met - would reflect a meaningful 18% increase on its sales over the past 12 months. Per-share earnings are expected to surge 106% to CN¥0.39. Before this latest update, the analysts had been forecasting revenues of CN¥7.4b and earnings per share (EPS) of CN¥0.62 in 2022. Indeed, we can see that the analysts are a lot more bearish about TravelSky Technology's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for TravelSky Technology

The consensus price target fell 16% to CN¥12.47, with the weaker earnings outlook clearly leading analyst valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values TravelSky Technology at CN¥21.48 per share, while the most bearish prices it at CN¥10.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that TravelSky Technology's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 18% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 2.9% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 19% per year. So while TravelSky Technology's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of TravelSky Technology.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for TravelSky Technology going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.